New Keystone route aims to avoid environmentally fragile areas – by Shawn McCarthy (Globe and Mail – April 20, 2012)

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Ottawa – TransCanada Corp. (TRP-T42.91—-%)plans a 32-kilometre detour – at no extra cost – for its long-delayed Keystone XL pipeline, and hopes the change will be sufficient to win approval from the U.S. State Department.

In a filing with the government of Nebraska, the Calgary-based pipeline company said the new route should allay concerns that the pipeline will threaten the state’s Sandhills region, considered a fragile environmental zone.

“The primary goal of the Nebraska reroute effort is to avoid the area defined by the [state’s Department of Environmental Quality] as the Sandhills region,” the report says.

In December, the Nebraska environment department provided TransCanada with a map that identified the extent of Sandhills region, saying the company needed to know what area to avoid.

The proposed new route cuts through a narrow alley between two sections identified on the state’s maps as no-go zones. TransCanada rejected an alternative route, which would have swung northeast of the controversial areas, because that route would have added to the overall length and cross the Niobrara River in an area designated as a wilderness zone.

“Generally, the goal is to minimize the length of the pipeline, which decreases the project footprint and impacts on the environment and landowners,” the company said.

As a result, TransCanada is proposing a route that deviates only slightly from its original plan – adding 32 kilometres to a 2,700-kilometre pipeline and keeping the projected cost at $7.6-billion (U.S.).

The company has divided the project and is proceeding with construction of the southern leg, which will carry crude from overflowing terminals at Cushing, Okla., to the huge refining hub on the U.S. Gulf Coast. But it still needs State Department approval for the cross-border portion that would stretch from Hardisty, Alta., to the Oklahoma-Nebraska border.

Both TransCanada and Calgary-based competitor, Enbridge Inc., are rushing to provide pipeline capacity to move crude out of Cushing, which is currently a landlocked destination for growing supplies of oil from Canada and the northern U.S. The glut at Cushing has created a large price differential between internationally traded crudes that are benchmarked against the North Sea Brent blend and North American crude that have their prices set against West Texas Intermediate.

But the Keystone XL project is seen as part of the needed infrastructure to relieve the oversupply of Canadian oil in the mid-continent of the U.S. and ease the pressure on Canadian crude prices.

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